Thanks to Tom Hickey who often posts comments on this blog.
| "...today’s economy is burdened with property and financial claims that Marx and other critics deemed “fictitious” – a proliferation of financial overhead in the form of interest and dividends, fees and commissions, exorbitant management salaries, bonuses and stock options, and “capital” gains (mainly debt-leveraged land-price gains). And to cap matters, new financial modes of exploiting labor have been innovated, headed by pension-fund capitalism and privatization of Social Security. As economic planning has passed from government to the financial sector, the alternative to public price regulation and progressive taxation is debt peonage." |
Read entire article here.
Mike & Tom,
ReplyDeleteThis is how Ive been trying to break it down lately:
If the FIRE sectors are "toast", meaning that they have so much that they are goint to have to continue to write off against earnings going forward for perhaps years, that it will be a long time before they can really make money.
So count them out.
Now Mike has current fiscal deficit running at about 110B/mo. that seems to have restored national level of incomes back to about pre GFC levels, but it has been redistributed to the top; resulting in unemployment and that has many citizens just living "hand to mouth" from unemployment benefits/medicaid/food assistance etc...
The question is can the sectors in "productive capitalism" do well/ok in this environment even if employment is down and the FIRE sectors are sucking wind?
I suspect they can as everyone needs food, energy, transportation, healthcare, etc...all the 'real' things people need. As the FIRE sector continues to mark down their holdings of property, eventually housing prices will continue to come down to levels that become affordable even to households that have taken a real hit to their incomes.
In my area, mid-atlantic, from talking to my people in architecture and real estate, and from looking around myself, residential real estate prices for the improvements (the structure NOT the land) are holding steady currently at about the $100/psf levels. I dont see this price level falling unless oil/lumber/energy/materials prices fall to trigger a further price drop and i dont see this happening based on the current fiscal policy. So the productive capitalists are going to get their $100psf (along with the other 'real' sectors equivalent) but the FIRE sector is going to have to continue to mark down the overpriced land values that they have caused to be inflated in the first place. I dont necessarily see a severe "debt deflation" type of scenario as possible at this point. But I see FIRE under continued pressure.
I think the "productive capitalism" sector is investable right now, FIRE is "toast" until the mark downs are done and employment really comes back...this is how I see the intermediate term. Govt maintaining current fiscal policy is key.
I cant believe FIRE doesnt see this and send their army of lobbyists to DC to promote full employment and tell the TV media that they advertise with to muzzle the deficit hawks and throw them off the air. This will get them back to profitabilty soonest.
Resp,
Here is a slogan :
ReplyDeletewhile Raygun printed for bombs, we need to print for people.
"don't print for bombs, print for people"
again, I have to point out the SuperConductorSuperCollider that was killed off in 1994 by the Republican congress and created a mini recession in Texas.
We could have a 42 Terra Electron Volt super particle collider, and instead we got Newt Gringrich who stole X-mas with his Austrian two step Austerity shut-down the government and Barney ( purple dinosaur ) ...
Then the German Austrian Austeritists turn around and get Switzerland and it's ability to print with its Swiss cheese to cough up the Large Hadron Collider with a mere 14 Terra Electron Volts but it is still the biggest machine.
Therefore, just as Norman says we are ceding our economic leadership to China, we are also ceding our fundemental scientific leadership to Europe in the name of THEIR Austrian Austerity.
So instead of an $14 billion dollar machine at 42 TeV in OUR backyard, there is a measly 7 to 10 Tev at the cost of $6 to $8 billion during the inflated Bush years in THEIR backyard.
Who paid for their toy ?
Where did they "print" the money?
Why are there so many tunnel projects in Switzerland ...do I hear infrastructure deficit spending?
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I'd like to point out what I pointed out before - that there is a form of "printing" in the Real Economy as opposed to that within the "Imaginary" economy of Fed & Treasury -
WHEN these banks especially goldman stanley etc created CDO's and other instruments what they were doing is piggy backing debt on debt, paper on paper. They increased the size of the economy but it was hot air.
This is a form of printing and when the music stopped, things imploded much more than what ever could happen with stimulus spending.
We know that stimulus spending is what creates the I = S relationship. Any credits formed within the Fed/Tsy are instantly mutliplied into investments and savings as a function of said spending.
The problem are these banks